Mediation in Bosnia and Herzegovina: A Second Application - 3

October 1st, 2006 | posted by Steven Austermiller

Mediation in Bosnia and Herzegovina:
A Second Application

C. The BiH Mediation Laws

1. Basic Provisions

In 2003, several international groups, including ABA/CEELI, Independent
Judicial Committee (IJC), OHR, and the World Bank, began to assist local
leaders in drafting the specific mediation law contemplated in the Revised
CCPs.135
After minor revisions, BiH’s first mediation law was passed in late
2004.136
Unlike the Revised CCPs, the BiH Mediation Law is a State (national) law
that applies to all BiH courts, whether they are in the RS, the Federation,
Brcko, or in the State Court of BiH.137

Article 2 of the BiH Mediation Law defines mediation as a proceeding
involving a neutral party who assists parties in reaching a resolution
of their dispute. The term “parties” is not defined. A question
might arise as to whether this law then applies to a party who has not
been named or served in a case, for whatever reason, but who is nevertheless
involved in the dispute. The local language term used for “party”
is the standard word for litigants but it can also refer to non-served
or unnamed parties as well. As with the other provisions herein, there
is no legislative history to assist. The United Nations Commission on
International Trade Law (UNCITRAL) Model Law on International Commercial
Conciliation,138
which served as an important model during the drafting process, has a
similar ambiguity.139
On the other hand, the U.S.-based Uniform Mediation Act (UMA),140
which sets forth a model mediation law for U.S. states, clearly defines
“mediation party,” “nonparty participant” (such
as experts, friends, support persons, potential parties, and others who
participate 141)
and person,” among other terms.

Another question might arise as to whether the term “dispute”
includes cases not yet filed, but Article 4 states that parties may agree
to mediation before the institution of court action.142
Thus, it seems that parties are free to engage in mediation before or
during court litigation. However, Article 4 does bar the use of mediation
after the conclusion of the trial.143
This is not a significant problem since few mediations occur after trials.
The Revised CCPs confirm this limitation in Article 86 and allow parties
to adjourn the trial for settlement purposes only once.144

The law provides for a default of one mediator, although parties can
agree to more.145
Article 4 of the BiH Mediation Law also repeats the provisions in Article
86 of the Revised CCPs that allow a judge to propose mediation to the
parties.146
This is appropriately flexible for BiH parties.

Article 5 limits the available mediators to a list established and maintained
by “the Association.”147
This was perhaps a legislative error because the Association was not defined
in the law. Until that list and Association were established, it appeared
that no mediations could take place. However, the issue was clarified
in subsequent legislation enacted in the summer of 2005. The Law on Transfer
of Mediation Affairs to the Association of Mediators (Second Law on Mediation)
establishes that the Association of Mediators of BiH will maintain a list
of approved mediators available to litigants.148
The Association will also maintain a fee schedule.149

Interestingly, a written agreement whereby the parties indicate their
willingness to mediate must be submitted to the court if it occurs after
the complaint is filed.150
This may be contrary to the UNCITRAL Model, which appears to forbid a
party from introducing evidence that another party was willing to participate
in mediation.151
Under the official UNCITRAL remarks, it is noted that the proscription
encourages the usefulness of mediation. Without the proscription, the
indication of willingness to settle might be used against a party in a
later proceeding and that potential “spillover” of information
may discourage parties from trying to settle.152
In contrast, the UMA exempts signed agreements (such as agreements to
mediate) from its general privilege against disclosure.153

2. Confidentiality Provisions

Confidentiality is one of the most important parts of any mediation regime.
Parties need to be able to discuss issues, compromise, and offer solutions
in a manner that guarantees that what is said will not be used against
them in later proceedings. Confidentiality has been called the “sine
qua non of the process.”154
The BiH Mediation Law provides for the confidentiality of mediation proceedings
in Article 7, but questions arise. It states that “the statements
of parties made in the mediation may not be used as evidence in any other
proceedings, without the approval of the parties.”155
This clear, pithy rule is probably better suited for BiH than the more
complicated and equivocal provisions in the UNCITRAL Model or the UMA.
However, no mention is made of documentary evidence. Could documentary
evidence presented in a mediation proceeding be used as evidence in a
later proceeding without the original proffering party’s consent?
It depends on whether the term “statements” as used in Article
7 includes documents and other written evidence. If the legislature had
meant to include documentary confidentiality, it could have easily done
so by adding a few words to that Article. One might read the first sentence
of the Article, “[t]he mediation procedure is of a confidential
nature,” as an intent for an expansive interpretation of the term
“statements;” however, that runs counter to the plain language.
This issue is crucial because the parties are obligated to submit to the
mediator all relevant documentation related to the dispute.156

Moreover, it is not entirely clear that views expressed or suggestions
made by a party in the mediation with respect to a possible settlement
are protected. Would a party’s settlement offer during separate
discussions with a mediator be considered part of that party’s mediation
“statements”? If not, then there does not appear to be any
confidentiality protections for settlement offers or negotiations. As
with documents, a party might argue that disclosure of a settlement offer
runs counter to the spirit of the law, which claims that the procedure
is of a “confidential nature.” BiH would be better served
with a clear statement to that effect. Both the UNCITRAL Model and the
UMA contain clear provisions for the confidentiality of settlement discussions.157
The confidentiality of settlement offers is a longstanding principle in
American jurisprudence. It has undoubtedly helped create a settlement
culture there. If BiH is going to create such a culture itself, this protection
needs to be more clearly delineated.

The same issue arises for the confidentiality of mediator statements.
Both the UNCITRAL Model and the UMA provide for the confidentiality of
mediator statements.158
The BiH Mediation Law is silent on this. This protection is important
to ensure the mediator’s candid participation and eliminate any
concerns about her statements being used at trial by the parties.159
Again, there is general language about the confidentiality of the proceedings,
but this protection should be clarified more explicitly

While Article 7 is silent on the applicability of confidentiality to
third party participants (the term is undefined), Article 16 provides
that all participating third parties are to give written confirmation
that they will adhere to the “confidentiality principle” in
the mediation procedure.160
This is probably sufficient to protect against future third party disclosures
as well as ensure full third party participation in the mediation proceedings.

The mediator must keep confidential all information provided to her during
a separate party caucus unless agreed upon by all parties.161
This is a laudable provision that encourages parties to have a frank discussion
with the mediator. It also improves upon the UNCITRAL Model, which provides
that the mediator may disclose any information to all parties, unless
the party provides the information with a specific condition of confidentiality.162
This is a high burden to place on an unsophisticated party or a party
engaged in fast-paced settlement discussions. It also opens the door to
a surfeit of satellite disputes about the condition’s scope and
whether it was clearly or properly delivered. The BiH law avoids these
potential issues by providing for a default rule of confidentiality instead
of the UNCITRAL Model’s default of disclosure.

3. Procedural Provisions

The BiH Mediation Law also provides a number of procedural provisions
that will enhance public acceptance: all parties have equal rights;163
the mediator shall proceed in a neutral manner164
without delay;165
parties may be represented by lawyers;166
the mediator shall, at the beginning, provide the parties with a brief
explanation of the goals and the procedure;167
the mediator may caucus with each party separately;168
and any party may terminate the proceedings at any time.169
Mediators will be subject to liability if they violate the Mediation Law.170
The law also provides clear and broad proscriptions against mediator conflicts
of interest, which are waivable.171
Unfortunately, the law does not indicate that the waiver should be in
writing.

Curiously, the mediator cannot propose resolution options unless a party
requests this during a separate caucus with the mediator.172
If followed strictly, the rule would seriously limit the mediator’s
effectiveness in many instances. Unsophisticated parties may not be aware
that they must make this request and thus, might lose out on hearing a
potential resolution option. In other cases, the fact that a party has
proposed an option, as opposed to the mediator, can make a big difference
in its reception, especially when the parties possess mutual distrust
of each other.

If the mediation proceedings are terminated without resolution, the mediator
must sign and submit to the court a written termination statement. 173
The statement must indicate whether the termination was at the mediator’s
request or a party’s request. While it is not clear from the text,
it appears that the statement might indicate which party asked for the
termination. Moreover, it does not prohibit any additional commentary
that the mediator might wish to make, such as whether a party engaged
in “good faith” negotiation or whether a party had been “the
problem” in failing to reach a settlement. This is potentially problematic
since the court would then be in a position to punish the seemingly difficult
party.174

If the mediation is successful, the parties and mediator are required
to draft and sign a written settlement agreement immediately.175
They are also required to submit the settlement agreement to the court.176
This raises potential confidentiality concerns if the agreement becomes
part of the public record. If a party knows that some embarrassing terms
of a potential settlement might be accessible to the general public, the
party might not want to settle. On the other hand, the vast majority of
judgments in BiH are not published, particularly at the first instance
level, and any interested third party would need to petition the court
for approval to access the file and judgment papers.177
Certain categories of cases, such as domestic relations or juvenile matters,
are further restricted.178
Under current BiH judicial conditions, this filing requirement for settlements
should not deter many parties.

More importantly, the filed settlement agreement has the “force
of a final and enforceable document.”179
Thus, a mediated settlement can be enforced in the same way as a judgment
or a “judicial settlement.” This is the most significant aspect
of the BiH Mediation Law. Before this, mediated settlements would be mere
contracts that would require filing a breach of contract lawsuit to enforce.
Now, a party can simply petition the enforcement division for action.
Parties can now settle disputes with the confidence that enforcement will
be much faster. This will do more to encourage mediation than any other
provision in the laws.

While this automatic enforceability provision will be the most salient
factor in promoting mediation in BiH, a few related concerns are worth
noting. There appears to be no court review of the mediated settlement—it
automatically becomes an enforceable document when it is submitted to
the court. While this is expeditious, it carries the potential for awkward
results. A mediated settlement agreement could contain a provision that
is contrary to public policy and the enforcement division of the court
would then be charged with enforcing such a provision.180
A second concern relates to stare decisis. Does a court judgment arising
from a mediated settlement form any kind of legal precedent in BiH? The
answer is unknown but should be clarified.181
This concern is perhaps less significant in BiH’s hybrid common/civil
law jurisdiction where precedent currently has a limited foundation. Nonetheless,
it could become more important in the future. Many civil law jurisdictions
now recognize the binding or persuasive quality of precedents in practice.182

One final open question relates to pre-litigation dispositions. If the
mediation settlement occurs prior to the filing of a complaint, what is
the legal effect of that settlement agreement? The law seems to intend
for such settlements to have the same effect as others.183
However, there is no court to which the parties can submit the settlement,
as required under Article 26, so perhaps Article 25’s automatic
enforceability provision would not apply.184
If that were the case, the Mediation Law would have the perverse effect
of increasing the judiciary’s caseload by encouraging parties to
file suit (so as to qualify for the automatic enforceability provisions)
instead of settling matters beforehand.

Although imperfect, the new mediation laws represent an important first
step. On balance, they will effectively promote mediation as an alternative
to court litigation. They will provide most parties with an officially
sanctioned opportunity to resolve their disputes more creatively, more
quickly, and more satisfactorily. With some important revisions, these
laws can potentially have a significant impact on the BiH legal culture.

VI. THE FUTURE OF MEDIATION IN BIH

By all accounts, the future looks bright for mediation in BiH. In 2004,
the World Bank (through its IFC Group—International Finance Corporation)
established the first pilot mediation program in Banja Luka, BiH. By late
2005, the program reported an impressive sixty-seven percent settlement
rate.185
It also found that ninety-six percent of the participants would use mediation
again and eighty-seven percent would be willing to pay for future mediation
proceedings.186
Due to the first program’s success, the World Bank/IFC established
a second pilot program in Sarajevo.187
In addition, the U.S. Federal Mediation and Conciliation Service reports
that mediation projects have been undertaken in power and transportation
matters.188
The Brcko District has also created its own court-annexed mediation program.189
While this demonstrates that BiH may be fertile ground for mediation,
a number of recommendations are in order before mediation can be become
fully integrated into the legal landscape.

135. Drafting of the Mediation Law Completed,
MEDIJATOR, Jul.-Aug. 2003, at 4, available at http://www.umbih.co.ba/eng/publications/publications.htm.
back136. ZAKON O POSTUPKU MEDIJACIJE BOSNE
I HERCEGOVINE [BIH LAW ON MEDIATION PROCEDURE], 37 Službeni Glasnik
Bosne i Hercegovine (2004) [hereinafter BiH Mediation Law]. back137. Id. art. 1. back138. UNCITRAL Model Law
on International Commercial Conciliation, U.N. GAOR, 57th Sess., Supp.
No. 17, U.N. Doc. A/57/17, Annex I, art.9 (2002), available at http://www.uncitral.org/pdf/english/texts/arbitration/ml-conc/ml-conc-e.pdf
[hereinafter UNCITRAL Model]. The UNCITRAL Model is the UN’s effort
at recognizing the growing interest in mediation and at promoting non-contentious
methods of dealing with disputes. Luis M. Diaz & Nancy A. Oretskin,
The U.S. Uniform Mediation Act and the Draft UNCITRAL Model Law on International
Commercial Conciliation, in NTERNATIONAL BUSINESS LITIGATION AND ARBITRATION
2002, at 791, 797 (PLI Litig. & Admin. Practice Course, Handbook Series,
Order No. H0-00GP, 2002). It also represents an effort to provide uniform
mediation rules across various countries, especially in emerging commercial
fields like Internet disputes. Guide to Enactment and Use of the UNCITRAL
Model Law on International Commercial Conciliation, ¶ 17 (UNCITRAL
2002) [hereinafter UNCITRAL Model Guide]. In this author’s experience,
the UNCITRAL Model has gained widespread acceptance and many transitional
countries have looked to it as an appropriate model. This may be due to
the fact that the UNCITRAL Working Group was composed of representatives
from a wide range of countries and legal traditions. In this context,
it is appropriate that this UNCITRAL Model was used in BiH. The BiH Mediation
Law does resemble the UNCITRAL Model to some extent. The UNCITRAL Model
may have an international competitor in the October 2004 Proposed EU Directive
on mediation, which seeks to promote mediation and harmonize the rules
among EU Member States. See Proposed EU Directive, supra note 83, §
1.1.1. The proposal, which at the time of publication was subject to comments
and revision, contains model law provisions somewhat similar to the UNCITRAL
Model. back139. The UNCITRAL Model uses the term
“conciliation” but this is to be understood to encompass all
types of proceedings wherein a neutral person or persons assists parties
reach an amicable settlement, including mediation proceedings. UNCITRAL
Model Guide ¶ 7; Diaz & Oretskin, supra note 138, at 797. back140. UNIFORM MEDIATION ACT (amended 2003),
available at http://www.law.upenn.edu/bll/ulc/mediat/2003finaldraft.pdf
[hereinafter UMA]. This was the result of collaboration between the Uniform
Law Commission of the National Conference of Commissioners on Uniform
State Laws (NCCUSL) and a drafting committee of the American Bar Association.
See Diaz & Oretskin, supra note 138, at 793. It was completed and
approved in 2001. The purpose of the UMA is to provide uniformity in the
mediation laws throughout the United States. The UMA Prefatory Note indicates
that legal rules affecting mediation in the United States can be found
in more than 2,500 statutes, many of which could be replaced by this Act.
UMA, at Prefatory Note, § 3. Uniformity has four main benefits. First,
uniformity is a necessary predicate to predictability if there is a potential
that a statement made in mediation in one U.S. state may be sought in
litigation in another U.S. state. Second, uniformity makes it clear which
rules apply in cross-jurisdictional procedures such as conference calls
or Internetbased fora. Without this, there is a conflict of state laws.
Third, uniformity provides up-front certainty about important issues like
confidentially in those cases where the mediation location is yet to be
determined or changeable. And finally, uniformity contributes to simplicity
in rules. Since the costs of learning one set of uniform rules are lower,
parties are more likely to learn them and this encourages mediation usage
and candor during participation. Id. The UMA has been adopted in six states
(Illinois, Iowa, Nebraska, New Jersey, Ohio, and Washington) and the District
of Columbia, and has been introduced as legislation in six others. See
NCCUSL website at http://www.nccusl.org/Update/uniformact_factsheets/uniformacts-fs-uma2001.asp
(last visited Mar. 11, 2006). It should be noted that in 2003, the UMA
was amended to incorporate by reference the UNCITRAL Model for international
proceedings. See 2003 AMENDMENT TO THE UNIFORM MEDIATION ACT, § 11.
back141. UMA, supra note 140, § 2(4) cmt.
4. back142. BiH Mediation Law, supra note 140,
art. 4. back143. Id. back144. Revised CCPs, supra note 124, arts.
86, 112. back145. BiH Mediation Law, supra note 136,
art. 3. back146. Id. art. 4. back147. Id. art. 5. back148. ZAKON O PRIJENOSU POSLOVA MEDIJACIJE
NA UDRUGU MEDIJATORA BOSNE I HERZEGOVINE [BIH LAW ON TRANSFER OF MEDIATION
AFFAIRS TO THE ASSOCIATION OF MEDIATORS], 52 Službeni Glasnik Bosne
i Hercegovine (2005). The mediator must have a university degree and have
completed the Association’s training program or another recognized
program. BiH Mediation Law, supra note 136, art. 31. back149. BiH Mediation Law, supra note 136,
art. 30. Parties are to split mediation costs that are payable to the
Association in equal parts, unless otherwise agreed. Id. back150. Id. arts. 5, 13. The agreement to
mediate must include the following information: information about the
parties to the agreement, their legal representatives, a description of
the dispute, a statement of acceptance of the mediation principles found
in the Mediation Law, the place of mediation, and the fee structure. Id.
art. 11. back151. UNCITRAL Model, supra note 138, art.
10(1)(a). back152. UNCITRAL Model Guide, supra note 138,
¶ 64. back153. UMA, supra note 140, § 6(a)(1).
See also id. § 6(a)(1) cmt.2. In practice, most settlement agreements
in the U.S. contain some form of confidentiality provision whereby the
parties promise not to disclose the contents, except under limited circumstances.
These provisions, though, are subject to evidentiary and public policy
needs that might override the parties’ private confidentiality agreement.
Id. And, the mere fact that a person attended the mediation is not confidential.
Id. § 2(2) cmt.2. However, the UMA does provide confidentiality protections
in the case of communications “made for purposes of considering
. . . initiating, continuing, or reconvening a mediation or retaining
a mediator.” Id. § 2(2). back154. Klaus Reichert,
Confidentiality in International Mediation, 59 DISP. RESOL. J. 60, 62
(2005). back155. BiH Mediation Law, supra note 136, art. 7. back156. Id. art. 17. This expansive production requirement
is probably useful for most disputes, since it encourages candor, but
it might be impractical for larger, documentintensive cases. Perhaps,
the mediator and the parties could informally agree to waive this provision
in the interests of judicial efficiency, although there is no opt-out
provision that allows parties to modify these rules. In contrast, the
UNCITRAL Model provides for opt-outs to any provision and the UMA provides
for written opt-outs of the confidentiality provisions. UNCITRAL Model,
supra note 138, art. 3. back157. UNCITRAL Model, supra note 138, art.
10(1)(b); UMA, supra note 140, § 4. back158. UNCITRAL Model, supra note 138, arts. 9-10(d);
UMA, supra note 140, § 4(b)(2). back159. UMA, supra note 140, § 4(b) cmt. 4(a)(3).
back160. BiH Mediation Law, supra note 136, art. 16. back

161. Id. art. 7. back162. UNCITRAL Model, supra note 138, art.
8. The UNCITRAL Model comments to art. 8 indicate that during the drafting
process,
“the suggestion was made that the party giving the information to
the conciliator should be required to give consent before any communication
of that information may be given to the other party. . . That suggestion
was ultimately not adopted, notwithstanding the recognition that such
a
practice was widely followed with good results in a number of countries
. . .” UNCITRAL Model Comments, ¶ 59. back163. BiH Mediation Law, supra note 136,
art. 8. back164. Id. art. 9. back165. Id. art. 20. back166. Id. art. 15. back167. Id. art. 18. back168. Id. art. 21. This is the “yes-talk”
provision. Lius M. Diaz, Yes-Talk Rule Prevails Over Non-Talk Rule in
Mediation, in INTERNATIONAL BUSINESS LITIGATION AND ARBITRATION 2004,
at 427 (PLI Litig. & Admin. Practice Course, Handbook Series, Order
No. H0-00P0, 2004). back169. BiH Mediation Law, supra note 136,
art. 19. back170. Id. art. 27. back171. Id. arts. 28-29. back172. Id. art. 23. In contrast, in the United
States, mediators often propose settlement ideas, sua sponte. back173. Id. art. 19. back174. In practice, a professional, thoughtful
mediator is unlikely to prejudice a party (and the mediator’s reputation)
by purposefully assigning blame. As with the BiH Mediation Law, the UNCITRAL
Model does not provide disclosure protections. In contrast, the UMA does
provide strict limitations on mediator reports. UMA, supra note 140, §
7 and related comments. back175. BiH Mediation Law, supra note 136,
art. 24. back176. Id. art. 26; Revised CCPs, supra note
124, art. 90. This might limit mediators to those who are capable of drafting
or at least understanding settlement agreements. back177. ABE/CEELI JRI, supra note 27, at 29.
back178. Id. back179. BiH Mediation Law,
supra note 136, art. 25. back180. In theory, the trained, approved mediator
would try to ensure that this does not happen. However, the mediator does
not have the experience or resources of the court. back181. Since this question opens the door
to a much larger debate about the role of stare decisis in BiH, the author
will not offer guidance on this and instead prefers to defer to the legal
evolutionary process underway. back182. See, e.g., Thomas Lundmark, Book Note,
46 AM. J. COMP. L. 211, 212 (1998) (reviewing D. NEIL MACCORMICK &
ROBERT S. SUMMERS, INTERPRETING PRECEDENTS: A COMPARATIVE STUDY (1997)).
back183. A strong argument can be made that article. 25
is unequivocal in that all settlements made under this law enjoy automatic
enforceability. Furthermore, Article 23(1) of the Law on Enforcement states
“[e]nforceable documents are the following . . . other documents
prescribed by law as an enforceable document.” ZAKON O IZVRŠNOM
POSTUPKU REPUBLIKE SRPSKE [LAW ON ENFORCEMENT PROCEDURE OF THE REPUBLIKA
SRPSKA], 59 Službeni Glasnik Republike Srpske (2003); ZAKON O IZVRŠNOM
POSTUPKU FEDERACIJE BOSNE I HERCEGOVINA [LAW ON ENFORCEMENT PROCEDURE
OF THE FEDERATION OF BOSNIA AND HERZEGOVINA], 32 Službene Novine
Federacije Bosne i Hercegovina (2003) [hereinafter collectively referred
to as the Law on Enforcement]. back184. Given this possibility, a cautious attorney might
advise her client to file a complaint prior to the mediation just to ensure
enforceability of the settlement. Of course, the very act of filing may
reduce the chances of settlement between the parties. If pre-litigation,
mediated settlements do enjoy automatic enforceability, the pre-litigation,
non-mediated settlements clearly do not receive such privileges. This
creates an incentive for pre-litigation disputants to utilize mediation,
even if they think they can resolve matters without a neutral party. back185. Presentations on Mediation in Banja Luka and
Sarajevo, MEDIJATOR, Nov.-Dec. 2005, at 3. back186. VESNA DASOVIC-MARKOVIC & KENDEL RUST, WORLD
BANK/IFC SEED PROJECT & CANADIAN INST. FOR CONFLICT RESOL., INTRODUCTION
OF MEDIATION IN BANJA LUKA’S 1ST INSTANCE COURT § 7 (Sept.
2004), available at http://www2.ifc.org/seed/PDFs/ADR_BiH_
Final_Report.PDF [hereinafter World Bank Evaluation Report]. back187. Press Release, World Bank/IFC Southeast Europe
Enterprise Development Project, Sarajevo Mediation Center to Open Tomorrow
(May 25, 2005) (on file with author). back188. Andrea Strimling, The Federal Mediation and Conciliation
Service: A Partner in International Conflict Prevention, 2 PEP. DISP.
RES. L. J. 417, 431 (2002). back189. See ZAKON O PARNICNOM POSTUPKU BRCKO DISTRIKTA
BOSNE I HERCEGOVINE [Code of Civil Procedure of Brcko District of Bosnia
and Hercegovina], 6 Službeni Glasnik Brcko, art. 220-221, 225 (2002).
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